Daily Deduction

from the Tax Policy Center

Out of Committee, Across the Globe, and Due West

By :: April 7th, 2014

Extenders move out of Committee. The Senate Finance Committee sent to the full Senate a measure to temporarily renew over 50 tax breaks that lapsed at the end of 2013. Chairman Ron Wyden tried to eliminate about a dozen, but the committee put nearly all of them back. A House Ways & Means hearing tomorrow will explore whether it’s better policy to make such breaks permanent. TPC’s Howard Gleckman and Gene Steuerle have differing views.

Corporate tax reform: Go global or just tax shareholders. Read Howard’s takeaway from an important paper by American Enterprise Institute’s Alan Viard and TPC’s Eric Toder on the acute need for corporate tax reform. They offer two creative solutions: (1) Reach international agreement on how to allocate multinational corporations’ income among countries or (2) Repeal the corporate income tax and instead tax U.S. shareholders’ dividends and accrued capital gains. The paper was presented last Friday. Check out the webcast here.

A Wyoming court says states can collect sales tax on the consumers' cost of online lodging reservations. “The Wyoming Supreme Court ruled the state can collect the full tax amount on retail lodging sales made by online travel companies, even if they have no physical presence in the state,” reports the Caspar Star-Tribune. Online travel companies had been basing their sales tax collections on the lower rates they negotiate with hotels, rather than the price they charge consumers.

Next door in Idaho… The state’s Sales Tax Bureau estimates that taxpayers who do not pay a “use tax” on items purchased out of state or online cost Idaho about $46 million a year, reports KBOI2. Only 9,600 of the nearly 700,000 Idaho filers claimed the use tax in 2012, adding up to a light load of about $540,000.

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  1. Michael Bindner  ::  3:39 am on April 8th, 2014:

    The way to deal with extenders and with global taxes is to adopt some kind of Value Added Tax. International taxes would require an international sovereign government, and I don’t see most nation states allowing that or the elections to an international legislature that would be required to adopt such a tax. Wyoming’s court is entirely correct on how much online hotel retailers have to pay – although they should be able to deduct the taxes that they themselves pay to hotels. It is no shock that Idaho is missing money on a use tax. Let us hope that they use this information to get their members of Congress and Senators to vote for the Internet Tax Collection bill.